Monday, October 25, 2010

What's Job Generating Growth

Economic Prospects for Middle East, North Africa and Afghanistan and Pakistan (MENAP).

The report recommended that policymakers in MENAP’s oil importers focus on the following priorities:
• Raising growth to generate employment. During the past two decades, per capita growth among the oil importers has been substantially lower than in other emerging markets, mirroring a weak trade performance (see Chart 2). Faced with already high unemployment—an average of 11 percent in 2008—the challenge for the oil importers will be to raise growth to provide employment for a working age population that is growing faster than in almost all other regions. To absorb the currently unemployed and new labor market entrants over the next decade (and assuming that the ratio of jobs created to economic growth remains constant), annual growth would need to reach 6½ percent.

• Enhancing competitiveness. MENAP oil importers—many of which face burdensome regulatory systems, weak institutions, and a dominating public sector—have much to accomplish to become competitive relative to other more dynamic economies. Sound macroeconomic policies—in particular, fiscal consolidation—will help support competitiveness, but governments will also need to make greater efforts to improve the business climate.

• Fostering trade. The region’s trading patterns remain oriented mainly toward Europe, and there has been relatively little change in the product mix. Although there has been some diversification of trade links, the region has benefited relatively little from the expansion of Asian and Latin American powerhouses—which contribute close to half of global GDP growth, but account for only about 9 percent of the region’s total exports.